 Social expenditure composition, inequality and growth in the OECD: Labour market policies are most effectivePedro Bação, Joshua Duarte and Marta Simões Journal of Policy Modeling, 2024, vol. 46, issue 1, 75-89 Abstract: The literature on public social expenditure envisages a role for the composition of public social expenditure in the design of policies to reduce inequality and promote economic growth. However, there is a lack of empirical evidence on which to ground social policy decisions. This study contributes to filling this gap by investigating the dynamic interdependencies between nine different categories of social spending, inequality and growth in 36 OECD countries over the period 1995–2017. According to the results of our work, based on a PVAR model, achieving a decrease in inequality without decreasing output growth is possible, requiring a change in the composition of social policy that gives more weight to spending on old age and survivors’ pensions, incapacity and family benefits, and active labour market policies, the latter having also a positive impact on growth. On the contrary, social expenditure on housing, as it has been conducted, appears to harm growth and enhance inequality. Keywords: Social expenditure composition; Inequality; Growth; OECD; PVAR; Equity-efficiency trade-off (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:46:y:2024:i:1:p:75-89 DOI: 10.1016/j.jpolmod.2024.01.001 Access Statistics for this article Journal of Policy Modeling is currently edited by A. M. Costa More articles in Journal of Policy Modeling from Elsevier |
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